 So this is the second session and in this session we're going to be looking at getting started with micro Xamad So we'll start off by introducing the policies We'll then go on to look at the definitional policies in a bit more detail and Lastly, we'll look at the tax and benefit policies, but only very briefly as these will be covered in the third session So we start off once again with our user interface and as I did in the previous session I will be switching from the PowerPoint slides to the live Version of the model to demonstrate some of the concepts that we go through So we start off with our list of policies on the left hand side and the policies are named after the standard Euromod conventions and I'll be Briefly talk about this towards the end of this presentation We then have on the far right hand side the description of the policies and as you can see each policy description is Proceeded by a three-letter acronym. So we have DEF for our definitional policies INC for our income policies, SIC for our social insurance contribution tax for our tax policy and Ben for our benefit policies We then have what is known as the spine on the far left hand side of the user interface and again the spine is The ordering of the policies and I'll be talking a lot more about this towards the end of the session as well So if we switch over to the live version of the model We'll see that we have our list of policies in this column column over here We then have our spine which is numbered from 1 to 18, which is the ordering of the policies We then have a description of the policies on the far right hand side And as I mentioned, these are all preceded by a three-letter acronym Describing what kind of policies they are So we have three types of policies in micro-Xamot. We have what are known as definitional policies For example, these are operating policies. We then have our tax policies. These are for example personal income tax or VAT We then have our benefit policies and In the case of micro-Xamot, we have we only have one benefit policy, which is the social cash transfer So we start off by looking at our definitional policies and in micro-Xamot We have five definitional policies. We have what are known as upgrading factors We have and I'll be talking about what all of these mean in a lot more detail as the session progresses We have what are known as income concepts or income lists We have tax units Constance and our last definitional policy is our standard output at the level of the individual So our upgrading factors and constants may need annual alteration and again I'll speak about why this is the case as I go through this presentation Our income concepts or income lists and our standard output at the level of the individual may need amendment But only if a new grant is introduced And our tax units Definitional policy will really need amendment So we start off with our first definitional policy, which is our operating factors So this policy Inflates the values in the input data set to bring them up to date and is used together with the upgrading indices tool And again, I will be demonstrating all of this on the live version of the model in a second So as I mentioned earlier The underpinning data set for micro-Zamard is currently the LC-MS 2010 and therefore we need to Adjust all values for inflation for the year 2015 and this will also need to be done for subsequent years such as 2016 2017 etc And the default inflator that we use is the consumer price index However, other specific inflators can be specified. For example We can have earnings Which can be inflated by the annual change in average earnings from the labor force survey so if we go over to our Live version of the model and look at our first definitional policy, which is upgrade. It's also the first policy on the spine We'll see that this policy is made up of one function our upgrade function and I'll be speaking about functions in a later session So We specify the name of the data set to which the upgrading applies and as I've mentioned before This is the 2010 Living conditions monitoring survey and the default upgrading factor is the overall CPI However, as I mentioned before we can have other inflators such as an earnings inflator, which we use to upgrade income from employment and self-employment income and Again, I'll be speaking about all of these variables and what they mean and how they're constructed in a later session So if we go to our country tools tab, which is our third tab in our list of tabs and we go to the upgrading indices So here we have our upgrading indices and this is where we specify them So this these are the indices that we use to upgrade our data set So we have various Indices we have our overall CPI For different years from the year 2009 to 2016 and we have our food CPI Which we use to upgrade our food variables our non-food CPI which we use to upgrade our non-food variables Alcohol tobacco transport and our earnings inflator, which we use to upgrade earnings So this is where we specify our operating indices So our next step initial policy is our constant policy So these are for example social benefit amounts tax thresholds that rates Excise rates etc. etc So if we look at our powerpoint slide, we have a screenshot of the constant Constance policy, which in this case is called constant def underscore ZM again We'll talk about the naming conventions a bit later So in this policy, we usually specify monetary amounts rates tax thresholds and other amounts That often change annually So again, I will move over to the live version of the model where I can show you our Constance policy again It's called const def underscore ZM and again it is made up of only one function, which is called def const and Here we have a list of constants. So for example our social cash transfer amount, which is 70 Zambian kvacha per month is specified in this policy and We also specify our VAT rate, which is 16% and It is always good modeling practice to specify Your constants in the constants policy rather than in an actual policy And we'll talk about this again in a later session So here we have some examples of constants. For example, we have the employee and employer social insurance pension contributions We have the rate and the upper limit We have the upper limit for turnover tax, which is 800,000 Zambian kvacha per year and we have The opaque beer excise duty per liter rate and the VAT rate, which is 16% So our third definitional policy is what is known or called incomeless or income concepts and Basically an income list is an aggregate of several variables, which is either added or subtracted to build that variable and It is important to remember that with income lists We need many different income concepts are required to simulate taxes and benefits So for example the income components included in the means test for social transfer or the income components that make up taxable income So the policy ill deaf underscore ZM specifies which income components relate to each income concept or income list and As I mentioned earlier it should not be necessary to amend this policy very often So yeah, we have an example on our user interface of the income concepts or income lists So as I mentioned before the name of this policy is called ill deaf underscore ZM and If we just take one income list, which is original income which is Number 2.3 on on the model We see that original income is called in micro ZM odd. It is called ILS underscore ORIGY and We see that this income list is made up from several different Other income components. So we see that it if in order to get original income We have to add income from employment income from pension income from self employment income from property income from investment excluding interest income from interest on savings income from private transfers income from other non-agriculture and income from agriculture So that is what makes up the income list original income and again. We can go over to the model and look at this policy So our income list Definitional policy is our second policy on the spine. So if we open that up we see that we have 24 income lists or income concepts and Again, if we look at our example, which was in our PowerPoint, which is original income Again, we have our name specified In this case, this is ILS underscore ORIGY and again, we see that this income list Which is an aggregate of several variables Which are added to to give us original income as I mentioned the income from employment pension self employment, etc, etc So those are our income lists or income components our next Definitional policy are our tax units So tax units are groups of people for example individual couple family or household And what tax units do is that they determine who is included during policy? Simulation so for example personal income tax is calculated at the at the individual level because the individual is the person liable to pay personal income tax and An income-based means test for future social assistance benefit might depend upon the income of the applicant and his or her spouse So that would be a different tax unit So each tax unit can be defined in various ways And this is described in the policy tu diff underscore ZM And again as I mentioned before it should not be necessary to amend this policy So again, if we go over to our model We'll see that our tax units are third policy on the spine and in the case of micro zamard We only have three tax units and if we look at our description of This policy we have our household tax unit the family tax unit and the individual tax unit And as you can see this the in the family tax unit has been turned off for both 2010 and 2015 as we don't use this specific tax unit But if we briefly look at at one of the tax units if we open up the household tax unit We'll see that again this tax unit is made up of one made up of one function Which is in turn made up of five parameters and again? We'll speak about functions and parameters in in a later session So we have the name of the tax unit in this case. This is tu underscore household underscore ZM We have the type which is household and we have the description of the type Which is all members of the household belong to one unit Then we have the dependent child condition which states that the child has to be equal to or less than 17 and has to be age has to be greater than zero So these these are the conditions for the dependent child condition and then we have two The last two parameters which assign the dependent child of the dependents and assign partners of dependents So that's our tax unit policy We then have our tax policies and in micro ZM odd We have three tax policies which are income tax value added tax and excise duties So as tax policies can be extremely complex They are only likely to need amendment if for example one is testing out ways of financing a new extended benefit or grant through the tax system And again, we can look at our tax policies on our model So we have In our micro ZM odd model. We have three tax tax policies, which we can briefly look at which is turnover tax So in our micro ZM odd model, we have three tax policies, which we can briefly look at which are turnover tax income tax and value added tax and I'll be going through all of these policies step-by-step in the last session of Our sessions where I walk through the entire model and explain All the different policies So our next definitional policy is our benefit policies and this case. This is our social transfers So in the case of micro ZM odd, we currently only have One benefit policy in version 1.4 and this is the social cash transfer We have The farmer input support pack However, this has not yet been modeled in this version and also the homegrown school feeding scheme Which is which has also yet not been modeled And again, as I said, I'll be going through the benefit policies in a lot more detail in later sessions So we can briefly look at the benefit policy on the model. So we have two Benefit policies or rather we've separated them into the social cash transfer for rural areas And the social cash transfer for urban areas. You'll see that we have the homegrown Policy and the Farmer input support pack Program, which have not been modeled and that is what that is why they have been turned off So just to go back briefly to the spine, which I mentioned at the beginning of the session and each policy Is numbered and ordered in the main window The policies are executed in order by the program. So it is therefore very important That policies which depend on information generated by an earlier policy are positioned after that policy So the ordering of the policies on the spine is very very important So again, we have our spine, which is the ordering of the policies So again, we have our spine, which is the ordering of the policies and we can briefly look at that in the model as well And so we have our spine, which is numbered from 1 to 18 So I'll briefly speak about the naming conventions behind the policies which Euromod and MicroZamod use So Euromod and therefore MicroZamod requires that the variables in the input data set before the simulation and the output data set After the simulations adhere to a specific naming convention So the variable names are formed by combining a series of acronyms Which together identify the variable and distinguish it from all other variables So the first letter in the variable name References the broad category of the variable and the next two letters reference the relevant subcategory within this broad category So for example If we take the variable called YEM So the first letter Y stands for income and this is the broad category of the variable And then the next two letters EM Stand for employment source and this is the subcategory within that variable So the variable YEM is actually an income variable and the income is waged or salaried employment If we take another income variable on YSE Again, the broad category Y stands for income It's an income variable and in the SE stands for self-employment. So this income variable The source of this income variable is self-employment. So this is income from self-employment If we take a look at one of our benefit Variables it starts with the B which is the broad category and stands for benefit and the last two letters SA Stands for social assistance. So this variable is a benefit and the benefit the type of benefit is a social assistance benefit So what happens if we have two or more different social assistance benefits? So for example, if we have two or more social assistance benefits we will distinguish between the use by Assigning a numeric identifier for the first social assistance benefit and then there's a different numeric identifier for the second social social assistance benefit and so forth So if we have again a benefit for social assistance, we start off with our broad category of variables, which is B Followed by the SA which stands for social assistance And then we will have the numeric identifier 0 1 for the first social assistance benefit 0 2 for the second 0 3 for the third social assistance benefit and so on and so forth and Again, very importantly To note all our simulated variables have the suffix underscore s so for example BSA underscore s is our simulated benefit from social assistance and BSA 0 1 underscore s is our simulated benefit from social is our first simulated benefit from social assistance So if survey respondents are asked the amount in Zamy and Kutcher of social assistance benefit They received in the past month. This is reported This reported variable would need to be called BSA and When we simulate the amount of social assistance benefit that the person should have received Then this simulated variable would need to be called BSA underscore s So just to give a brief recap the first letter of the variable name identifies the broad category of the variable type and we have a list of Various variable names so D stands for demographic L for labor market T for tax S for social insurance B for benefit as we've just seen X for expenditure Q for quantity A for asset and S for system So the data requirement document details all the variables in the input data set and this is quite an important document to keep on hand To just to know which variables That the model uses So now what what we're going to do is we will now spend some time exploring the model identifying the different types of policy and in particular becoming familiar with the Definitional policies which form the basic framework of the model Thank you